T H I S W E E K : 1 1 PA G E S O F B O N U S C O N T E N T P O W E R M E TA L R E S O U R C E S WISHBONE GOLD
JUNE MAY 2019 2021
Energy, renewables and resources I N C L U D E S C O M PA N Y P R O F I L E S , C O M M E N T A N D A N A LY S I S ISSN 2632-5748
DISCLAIMER IMPORTANT
Introduction W
elcome to Spotlight, a bonus magazine which is distributed eight times a year alongside your digital copy of Shares. It provides small caps with a platform to tell their stories in their own words. This edition is dedicated to businesses powering the global economy, whether that be in mining, oil and gas, the renewables space, infrastructure or energy provision. The company profiles are written by the businesses themselves rather than by Shares journalists. They pay a fee to get their message across to both existing
shareholders and prospective investors. These profiles are paidfor promotions and are not independent comment. As such, they cannot be considered unbiased. Equally, you are getting the inside track from the people who should best know the company and its strategy. Some of the firms profiled in Spotlight will appear at our webinars where you get to hear from management first hand. Click here for details of upcoming events and how to register for free tickets. Previous issues of Spotlight are available on our website.
02
Shares Spotlight is a mix of articles, written by Shares magazine’s team of journalists, and company profiles. The latter are commercial presentations and, as such, are written by the companies in question and reproduced in good faith. Members of staff may hold shares in some of the securities written about in this publication. This could create a conflict of interest. Where such a conflict exists, it will be disclosed. This publication contains information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. Comments in this publication must not be relied upon by readers when they make their investment decisions. Investors who require advice should consult a properly qualified independent adviser. This publication, its staff and AJ Bell Media do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions.
Shares Spotlight JUNE 2021
Why the future is bright for tin prices The metal is used in wide variety of applications and supply is under threat Tin’s largest application, at 49%, is in solders – low melting point, conductive alloys. Solders act as both glue and conductor between individual electronic components and between components and PCBs (printed circuit boards). It is this combination of being able to fix components in place and to ensure good conduction that makes them critical to electronic circuitry. Previously, solders were typically a 60:40 tin–lead alloy, but with the banning of lead in solders in 2006 by the European Union, China and California, 95% of solders are expected to be lead-free by 2023. The second application is in chemical compounds, at 18% of demand. Largest among these is as a stabiliser in PVC (7.7% of annual usage), with smaller applications such as catalysts in the production of other plastics, pigments in the ceramic industry and as a coating for glass. OPPORTUNITIES FOR DEMAND GROWTH The growth potential for tin cannot be underestimated. It is so fundamental to renewable energy, electric vehicles and IT systems that the Massachusetts Institute of Technology (MIT) estimates tin is the most pivotal metal to new technologies and the
energy transition, well ahead of cobalt, lithium and with more than twice the number of applications as nickel. Of tin’s applications, electronics is both the most significant today and also the greatest source of potential demand expansion. It is inconceivable to consider life without electronic devices, which would be unfeasible without tin solders, and looking forward electronic demand is only set to increase. Appetite for electronic devices has been forecast to grow at 4.8% each year to 2025. These figures now look conservative given that the Covid-19 pandemic has sped up the move to home-working and increased the appeal of smart-home and in-house entertainment systems. Electronics are also lifting
03
demand for tin-based chemicals. Capacitive touchsensitive screens, used on smartphones for example, employ a thin layer of indiumtin oxide to detect screen contact. The proliferation of touch-screen electronics has boosted demand for this oxide. Tin demand will be further bolstered by the accelerating environmental sector. In the near term, renewable infrastructure development, such as solar-panel farms and wind turbines, require extensive control circuitry, which will feed into solder demand. Further out is the potential demand from batteries for electric vehicles. Tin compound additives already offer important performance improvement in lead acid batteries, but this could be overshadowed by tin usage
Shares Spotlight JUNE 2021
in electric vehicles (EVs). Lithium-ion batteries (LiB) have been shown to achieve significant increases in specific energy – the amount of power in a kilogram of battery – if tin is added to the graphite anodes. This is especially useful in EVs and electric planes, as it would allow the same range from smaller or lighter batteries. With the exponential growth in electric cars, demand for tin from LiB batteries is forecast to ramp up from almost nothing today to account for 3–4% of tin demand by 2025, and more as EVs usurp internal combustion engine vehicles in the second half of the decade. WHERE DOES TIN COME FROM? Only one tin ore, cassiterite, is economically extractable. The majority (54%) of cassiterite is found in China and the Southeast Asia Tin Belt, running from Myanmar and Thailand to Malaysia and Indonesia. Other sizeable deposits are found in Latin America (Peru, Bolivia and Brazil), Northwest Europe, the Democratic Republic of the Congo (DRC) and Australia. Since around 2000, supply– demand fundamentals had been moving into deficit due to mine depletion and the shift to lead-free solders. The International Tin Association
(ITA) had expressed concerns of significant deficits from 2010. However, this challenge was avoided by ore supplied from Myanmar. Myanmar, which recorded almost no tin ore mining in the years to 2009, ramped up output to become the third-largest miner by 2015. With no domestic production, the US has championed recycling to reduce its import dependence. This also brings environmental benefits and so is also attractive to the European Union. In 2020, recycling returned approximately 24% of tin back into the US supply chain. Volumes from recycling are expected to increase as processes for breaking down electronics and batteries are further developed. HOW IS SUPPLY THREATENED? Tin supply is a major concern. Of the five London Metal Exchange (LME) base metals – lead is not covered – the OECD assessed tin as having the highest supply risk, the highest political risk rating and the second-lowest recycling rate. The first worry is falling output from Myanmar. In 2016, the country accounted for 19% of global production, but this had fallen to 14% in 2019 and 11% in 2020. Without
this supply, deficits are likely, which has already lifted prices. Supply will tighten as mine depletion continues, demand strengthens and any new facilities take time to ramp up, with some level of deficit expected for the next three to five years. Secondly, a significant part of mining is from the unregulated, informal sector. That is, by artisan miners with little in the way of tools. This is prevalent in Myanmar and the DRC. As the proceeds from tin mining could be used to fund armed groups, it was included in ‘3TG’ – tungsten, tantalum, tin and gold – conflict mineral legislation. Both the United States’ 2010 Dodd Frank legislation and the EU’s 2017 Conflict Minerals Regulation (applying from 1 January 2021) require companies to conduct due diligence on sources of tin ores. This could effectively cut out artisanal sourced material to companies working in regions affected by these regulations, and so reduce usable supply availability. The EU has so far not classified tin as a critical mineral because supply risk is reduced by domestic producer Metallo of Belgium. However, for the US the concerns are more acute as it has no domestic production, and reduced supply would have an impact on many industries, especially those in the value-adding, high-tech sector. The US includes tin on its critical minerals register and maintains a strategic reserve of 4,000 metric tons, although this is equivalent to just 35 days of 2020 consumption.
This article is based on a report produced by Edison Investment Research, other Edison Explains and thematic research is available here.
4
49 04
Shares Spotlight Shares SpotlightJUNE MAY2021 2019
Shares Spotlight Power Metal Resources
Power Metal Resources gears up for potentially gamechanging drilling in Botswana powermetalresources.com The South Ghanzi coppersilver project lies within the prolific 1,000 kilometre-long Kalahari Copper Belt (KCB), which stretches from northeastern Botswana all the way to western Namibia. Held within a JV by Power Metal Resources (POW:AIM), together with its 50/50 joint venture partner Kavango Resources (KAV), an impactful drill campaign here could soon be about to transform both companies. For any exploration company to drill in Botswana,
securing an environmental management plan (EMP) is essential. Right now, it’s the only box left to be ticked at South Ghanzi, before drilling can commence. The JV partners are already in the final stages of the EMP process and believe the rig could mobilise in the very near future. This is when things could really start to get exciting. Since the copper-silver targets at the South Ghanzi project are relatively shallow, it should only take a few weeks
05
to test once the drill bit has started turning. Assays will arrive thereafter and it should soon become clear just how valuable the South Ghanzi project really is to Power Metal. As chief executive Paul Johnson points out: ‘South Ghanzi is drill ready, we have a contractor lined up and funds in place to start operations immediately. ‘We will know very quickly of this project’s true potential. It’s an exciting time for all involved.’ For investors so often frustrated waiting for other companies to share results, the immediacy of these plans will no doubt be refreshing. There is good reason to be confident in what drilling could reveal. So far, all the work at South Ghanzi has validated the project’s original exploration hypothesis. In fact, ever since Power Metal’s JV partner Kavango first applied for the prospecting licences, all evidence points towards the potential for the project to host multiple mineralised systems. Indeed, the licences were originally pegged based on Kavango’s interpretation of
Shares Spotlight JUNE 2021
Shares Spotlight Power Metal Resources
the regional geology. The company’s expert exploration team identified what are known as a ‘fold noses’, where other discoveries within the Kalahari Copper Belt have been concentrated. In technical terms, a ‘fold’ is when rocks are bent or flexed by temperature, pressure, or stress. And the ‘nose’ term is applied when there’s a curved shape at the tip of the fold – an area where concentrations of precious and base metals are known to accumulate Folds can plunge, meaning they tilt in one direction rather than being horizontal. At South Ghanzi, the prospective fold plunges southeast and is coincident with a large four kilometre by four kilometre conductor, which was identified by a recent airborne electromagnetic (AEM) survey that was flown over the project. This conductor— named Acacia—is now a primary exploration target, as it possesses several geological and geophysical comparisons as several of the KCB’s other major proven copper-silver discoveries. THE PATH TO RICHES? What’s particularly interesting is that soil sampling recently completed over Acacia outlined a coincident geochemical anomaly with highly elevated levels of zinc and copper, both of which are key indicators of buried sedimentary-hosted copper-silver deposits within the KCB. Alongside these promising exploration results at the Acacia target, the AEM survey led to the discovery of seven other discrete conductive targets, which are all potentially prospective for significant copper-silver mineralisation. Results so far have
been promising, with soil geochemistry directly over Acacia outlining elevated copper at more than 42 parts per million (ppm). At another prime target, Morula, copper-in-soil concentrations were between 38 and 62ppm copper. Interestingly, copper is less mobile in soils than zinc, which makes finding these elevated copper results at surface and right on top of a fold nose very encouraging. For Paul Johnson, this is a case of history possibly repeating itself in a most profitable manner. Johnson is no stranger to Botswana exploration, having previously been CEO of Metal Tiger (MTR:AIM). While there he negotiated a 30% stake in a MOD Resources’ project in 2015 in the KCB that turned out to be a game-changer and became one of the belt’s most famous discoveries. Drilling at that project— which came to be known as T3—started in early 2016 and within the first few holes a significant copper-silver discovery was made. T3 was eventually acquired by Sandfire Resources and is now moving
06
swiftly towards commercial production and notably sits only 35 kilometres from South Ghanzi. Johnson notes: ‘We’re seeing exploration evidence at South Ghanzi, which is in line with what we saw at Metal Tiger when we were in the early days exploring the T3 project, which is obviously extremely exciting for us at Power. The only thing to do now at South Ghanzi is drill.’ With an approved EMP, that’s exactly what the joint venture partners plan to do. From that point the starting gun will be fired. Very quickly, South Ghanzi could then have the same transformational effect on Power Metal and Kavango that T3 had on Metal Tiger and MOD Resources back in 2016. Expect to see fast progress in the field this summer. 3.50 POWER METAL RESOURCES 3.00 2.50 2.00 1.50 1.00 0.50 0 2020 2021
Shares Spotlight JUNE 2021
Shares Spotlight Wishbone
In 2020 the world stopped flying but Wishbone continued wishbonegold.com In March 2020 Emirates airlines, the lifeblood of Dubai, grounded all but a few of its fleet of nearly 300 planes. Overnight the thriving nexus of trade in Dubai from across the world stopped as if it had never existed. This cut off Wishbone Gold’s (WSBN:AIM) supply of traded gold arriving on daily flights from African capitals and once its stocks were sold it was over. There are many ways the firm could have responded in such a situation: Panic, despair, head to the beach…. None of these would have been out of line with many other respondees around the world. Instead, during April and May, Wishbone restructured the company taking it back to its exploration roots in Australia. A recapitalization financing was announced on 2 June 2020 at 1.35p giving it a market cap of £1.25 million. As of writing (June 2021) its shares are at 18.5p and has a market cap of £31.3 million. Just over one year later, and Wishbone sees great things for 2021 and beyond. This has helped make
Wishbone one of the top performing shares in London over the last 12 months. WISHBONE TODAY The company has six exploration properties in Australia: four in Western Australia in the Paterson
07
Ranges area of the Pilbara and two in Queensland. WESTERN AUSTRALIA Wishbone has four exploration tenements in WA comprising the Red Setter group of three tenements and the Cottesloe tenement.
Shares Spotlight JUNE 2021
Shares Spotlight Wishbone
RED SETTER AND ASSOCIATED TENEMENTS The major focus in WA is the Red Setter project. This is a 57.4 square kilometer (km) tenement, which is the major part of the 67 square km package acquired in November 2020. Red Setter is located only 13 km southwest of the Newcrest Mining (ASX:NCM) Telfer gold mine and about 60km west of Newcrest and Greatland Gold’s (GGP:AIM) Havieron discovery. For exploration appeal, it is hard to conceive of a better area to be in than the Paterson Ranges in the Pilbara and this where all Wishbone’s properties are located. But to get a feel for why this whole area is one of the hottest exploration areas in the world you need to know the Havieron story. Greatland acquired Havieron towards the end of 2016 for A$250,000 and some contingent payments if they mine it. Havieron had been drilled previously and abandoned but Greatland’s geologists believed that the drilling had simply not gone deep enough. They were right. Accordingly, they copied an existing hole and simply drilled deeper. Once through the Permian cover, at a depth of about one kilometre, there was massive mineralization which drove Greatland to more than £1 billion market cap. When something like this happens, it is a real head smacking moment for geologists the world over. All the previous models they have been using turn out to be wrong and there has been a scramble for properties in that region ever since. Wishbone now employs some of the specialists who
worked on Havieron and has modelled and analyzed Red Setter and will be drilling later this year. The modelling of the original government data looked promising but the acquisition of new 3D inversion ultra-detailed magnetics in February 2021 delineated three highly magnetic bodies over an expanded area covering three km by one km. The largest individual priority one magnetic target has a 1,500 metre strike length with a width of 400 metres and starts at around 75 metres from surface. In addition, this survey revealed that all the magnetic targets are much shallower than 150 metres to 250 metres depth previously modelled. The relatively shallower target depth could be advantageous both from an exploration and future development potential perspective. In the RNS which Wishbone issued at the time there was this comment from Simon Beams, the managing director and principal geologist of Terra Search: ‘The detailed magnetic survey substantially expands and enhances Red Setter. There are some very promising indications of a
08
large hydrothermal system, with similarities to the new Havieron gold/copper discovery in the area. ‘The previous drilling on the main 1.5 km long target intersected similar alteration, and the right pathfinder metal indicators, peripheral to the main target. We now have multiple untested high-order magnetic targets across the entire prospect.’ In May 2021 a Program of Work was approved by the Western Australian Government’s Department of Mines. This includes a drilling program for up to 100 drill holes to depths of 300 metres. These are designed to test for potential gold and copper mineralization on the multiple magnetic targets. Richard Poulden, chairman comments: ‘It sounds a bit downbeat set out like that but in fact it is amazing.’ COTTESLOE PROJECT In March 2021 Wishbone acquired an option on 100% ownership of the 92.19 square km Cottesloe project which is also in the Patersons Range region. Cottesloe is located 35 km south east of Red Setter and around 55 km south of
Shares Spotlight JUNE 2021
Shares Spotlight Wishbone
Newcrest’s Telfer gold mine. Cottesloe consists of one granted exploration license E45/4543 and is considered highly prospective for precious and base metals. Wishbone acquired Cottlesloe to give its exploration portfolio a balance by adding silver and lead: essential minerals for the manufacture of electric vehicles of all types. There is known mineralization at Cottesloe at surface and a few historic drilling results confirm high grades of silver in different parts of the property. As with Red Setter the company has an approved program of works for drilling later this year which will give a clearer idea of what it has here. QUEENSLAND In Queensland the company has the Wishbone group of licences in the highly prospective Mingela area about 80 km south of the major Queensland port city of Townsville. This is situated between two large producing areas with Charters Towers to the west and Ravenswood to the east, which was recently
sold for up to A$300 million. These two mines have combined inferred reserves of over 10 million ounces. The Wishbone property was recently compared to the 5 million ounce Ravenswood gold mine by Dr Simon Beams of Terra Search Australia at the annual AusIMM conference in June 2021. The presentation generated a lot of interest as it was the application of new technology to existing resources leading to a revised view on the prospectivity of the region. Wishbone has high-grade surface rock-chip samples with assays at surface up to 25.2 grams per tonne gold (g/t Au) at the Hanging Valley prospect and 7.32 g/t Au at the Oaky Mill prospect. Also, there were significant copper systems running up to 3.3% copper found at multiple locations. WHITE MOUNTAINS The Granite Castle deposit on the western boundary of White Mountain has recently been drilled by others to confirm significant gold and silver in grades and tonnage of potential economic significance. In addition, at the
09
centre of White Mountains is an intrusion of an OrdovicianSilurian granitoid which hosts a trend of deposits, namely the Diecon Mine (gold); Edwards prospect (antimony) and Northeast Workings (gold). SOME HIGHLIGHTS FROM RECENT EXPLORATION Grades up to 44 g/t Au (grams per tonne gold) returned from NE Workings from stream sediments. Grades up to 11.9 g/t Au reported from rock chips at NE Working. CONCLUSION Richard Poulden, chairman comments: ‘ We are at the foothills of building an amazing company. We have a great team both within the company and with our advisors most of all we are grateful to our shareholders for your support.’ 20 WISHBONE GOLD 18 16 14 12 10 8 6 4 2 0 2020
2021
Shares Spotlight JUNE 2021
Databank – Commodity price performance 2018-2021 2018 Copper
-16.1%
6.3%
Corn Crude Oil
2019
3.9%
0.1%
-18.7%
Gold
21.9% -1.4%
18.7% 10.8%
Natural Gas Platinum
18.7%
-14.3%
2020 Copper
18.1% 11.8%
38.2%
-22.2%
44.5%
Gold
24.2%
Natural Gas
20.4%
Platinum
2021*
28.5%
Corn Crude Oil
-26.0%
-5.9 25.3%
6.9%
-0.8%
Source: Refinitiv. *Data to 22 June 2021.
Shares Spotlight ISSUE XXX
10
Shares Spotlight JUNE 2021 81
Databank – Gain / loss so far in 2021 50 Gas
44.5% 38.2% Oil
25.3%
25 Corn
18.1%
Copper
-0.8%
Platinum
0
-5.9% -25 Gold
-50
Source: Refinitiv. Data to 22 June 2021.
11
Shares Spotlight JUNE 2021